In 2019 the UK property market was deflated, due to the uncertainty, because of Brexit. With Brexit uncertainty out of the way. Would-be buyers, that were on the sidelines, have entered the property arena.
The recent data shows that; the UK property market was showing signs of recovery.
Now, all eyes are on the Coronavirus, as it could impact the UK property market. To what depth property prices are affected, will depend on, how quickly Coronavirus is contained.
According to the Halifax, house prices hit a new high in February. However, the Halifax has issued a warning on the property prices, due to the potential intensity of the coronavirus outbreak.
The Halifax, one of the biggest UK mortgage lender, said prices rose by 0.3% in February to a record of £240,677. The quarterly rate of house price inflation also rose to 2.9%.
Property prices on average are £8,000 more than in September 2019. The slight recovery was due to the Brexit uncertainty, which is no longer lingering.
Mr Russell Galley Halifax managing director, said: “The UK housing market has remained steady heading into early spring. The sustained level of buyer and seller activity is strong, compared to recent years, with positive employment conditions and a competitive mortgage market, continuing to support demand.”
However, the February figures reflect property market activity before the coronavirus-inspired falls in stock market values and financial confidence.
Galley said: “Looking ahead, there are a number of risks, including the potential impact of coronavirus, which continue to exert pressure on the economy and we wait to see how these will affect housing market sentiment later in the year.”
Estate agents are already reporting how Coronavirus is impacting home sales now. Jovani Middleton of the agents Mayfair of Grimsby said “We had four sales this week that were going to exchange this Friday. 2 have pulled out due to Coronavirus. I think, if the Coronavirus is not contained, quickly, we could see the property prices being impacted. Buyers are pulling out, and sellers may be forced to lower the prices, to enable them to secure a sale.
Landlords with commercial property assets may have more financial exposure, then residential landlords. It’s simple if businesses have no income, tenants will start defaulting on rent payments.
Some businesses in China have had to shut factories, offices and shops. Tenants are asking landlords for a rent-free period and financial assistance from banks too.
UK landlords will need to embrace themselves, be good samaritans if the Coronavirus, is not contained.
Mr Sajjad Ahmad, the CEO of the British Landlords Association, said: “Our members are concerned like many others. The property they had planned to sell, or buy, they have put on the back burner, until they can see, that the Coronavirus is contained”.
He went to say: “today’s headlines: like Northern Italy quarantines 16 million people is knocking investors confidence”.
A Mr John Hanson Wellington a property Developer said: “The world economy is already showing the first signs of a new serious downturn. We have in the last few days seen the biggest plunge in share prices since the 2008 financial crisis. China’s economy is likely to contract for the first time in decades, which will impact the wider world economy.
At the moment its too early to see, as it will take a few months for the data to come through. Having said that housebuilders have only been affected, with minor dips in their share prices. Redrow was down over 1%, Crest Nicholson had slipped 0.57%, Barratt’s shares had been nudged down by 0.03%. This may be the start of the downturn.”
Source: British Landlords Association
Author: Marc Attwater
Date: 8th of March 2020
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